ECO20003 - Managerial Economics and Strategy - Managerial Economics - Essay Writing - Economics Assignment Help

Assignment Task

The purpose of this Essay is to study and to discuss a problem associated with managerial economics. You should draw on concepts and methodologies introduced in the course.
Read the two articles below, then explain what market structure the industry might be, providing your reasoning. Explain what impact the structure would have on the performance of the industry and describe the pricing strategies that firms in this industry might pursue (bearing in mind the possible price elasticity of demand for the product). Explain further how changes in demand and supply might be affecting prices.
Font style: Times New Roman 12, double spaced, MS Word. Submit via Canvas on the Assessment link provided.

Article 1: Stop petrol profiteering amid coronavirus: ACCC
 By Harrison Astbury on April 22,2020
“Australia's chief competition watchdog today revealed petrol retailers are skimming an extra 5c per litre of petrol in profit in metro areas.
The Australian Competition and Consumer Commission (ACCC) said the weekly average international crude oil prices have decreased by about US $50 a barrel, which has flowed on to the wholesale level, but not quite to the retail level.
It revealed the wholesale petrol prices have decreased around 50 cents per litre (cpl) in the past week, but across the five largest capital cities, prices have decreased by an average of only 45cpl.
ACCC chair Rod Sims said retailers have been too slow to react to world events, such as COVID-19 hampering demand, and the drop in crude oil prices.
“The drop in the crude oil price is good news for the Australian motorists," he said.
"At this time the Australian economy needs all the assistance it can get, and lower world crude oil prices are one of the few positives from current world events.
“In the larger Australian capital cities, petrol retailers took too long to pass on the savings from the rapid drop in international oil prices, and this did not reflect well on them.”
For reference, the Government excise on fuel is 42.3cpl, and GST is also charged on fuel - these taxes make up about half the price of a litre of fuel in metro areas (at the time of writing). 
On Monday (US time) West Texas Intermediate (WTI) oil futures (the benchmark oil price in North America) fell into negative pricing for the first time due to excess supply and no capacity to store it.
Tapis Crude futures - the crude oil primarily used in Australia - are still trading in positive territory at about US $22.60 at the time of writing.
For reference, Brent (European markets) was trading at US $19.33, and WTI at $13.90 - a 20% rebound on yesterday as the May futures contract settled.
It's important to note, this is for the futures price, not the spot price of oil - the futures price is the one most quoted on the nightly news.”

Article 2: Still paying too much at the petrol pump? 7 May 2020 by Andy KollmorganPrices have tumbled on the back of the drop in global oil prices, but they should have come down even further. 
CHOICE reviews fuel apps – must-have tools for drivers looking to pay a fair price and drive fairness in the petrol sector.
Motorists have a right to feel ripped off when it seems they're paying too much at the petrol pump – especially when they probably are. 
That's truer than ever in the midst of the COVID-19 crisis, when instances of what looks a lot like price-gouging are not hard to come by.
And with oil cheaper on the international market than it's been in a long time, motorists understandably expect a corresponding drop in petrol prices.
For the most part, that's happened in recent weeks. But prices haven't dropped as fast – or as consistently – as they should have.
The international price of oil has fallen by about $50 a barrel since the beginning of the year. The cost of petrol in Australia's five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth) fell by about 45 cents a litre over the same time period.
With price drops of this magnitude, who's complaining? If you look closer, it turns out we all should.
Tips for buying cheaper fuel
Petrol should be even cheaper
A report released by the ACCC on 22 April makes the case that Australians were still being overcharged at the bowser long after the fall in oil prices filtered through the local petrol industry – especially if they lived in Hobart, Canberra, Darwin or many regional areas around the country.
In many cases, the overcharging may have been subtle. Five cents a litre more, for instance, may not seem like a lot until you analyse the $333 million in net profits Australian retailers made on petrol products in 2017–18 (the most recent period covered by the ACCC report).
It was a record high, but it works out to an average profit margin of just three cents a litre (although that's almost double the average from 2008–09 to 2013–14 of 1.6 cents a litre)
So five cents a litre is a lot when you have the economies of scale that Woolworths, Coles, BP, Caltex, and 7-Eleven can bring to bear.
"In the larger Australian capital cities, petrol retailers took too long to pass on the savings from the rapid drop in international oil prices, and this did not reflect well on them," ACCC Chairman Rod Sims said when the report was released.
"Especially at this difficult time, retailers must not take advantage of the situation to increase their profits, but should pass on savings to motorists." 
A number of motorists who have contacted CHOICE in recent weeks feel the same way. "Amazing, in Brisbane petrol has gone from $1.12 to $1.58 overnight, despite the cost of fuel going down," one recently told us.
"Petrol prices are all over the place," said another. "I was looking at a fuel app. Lots of places advertised around $1.50 or as low as 80c. Not sure if it's price gouging or just normal."

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